ET Now speaks to Bhasin at length about getting content right on digitalET Now | September 26, 2017, 09:48 IST

Talking to ET Now, Ashish Bhasin, chairman and CEO South Asia, Dentsu Aegis Network, says players who get the content right on digital, in the long run, they will be the survivors after this initial euphoria is over.

Edited excerpts:

Do you believe that the Indian ad spend at 0.35% of GDP is at the lower end of what we have seen with major global economies? Is it likely to show 15% compounded annual growth rate till FY22? Are we likely to see that sort of pickup through the course of the second half of this year?

We are a very under advertised market and definitely, in the next three to five years, we will see an upward trend. The CAGR will be around 12% to 14% as per our calculations but you got to remember that not all media will be growing at the same rate. Digital, for example, is seeing a much faster growth. On the other hand, some parts of print are seeing a much slower growth. So it is not an even growth but definitely, I think if you look at a three or five-year perspective there will be very good growth.

Digitisation in India is an important catalyst for the growth of the subscription industry as well. That has the potential to grow at double digits revenue in the medium term as well. How is it that you are looking at the media industry at a time when digitisation seems to be on the cusp of a breakout? How different things would be, post phase IV?

They are already in that cusp and it is not just the digitisation of television but the entire consumer consumption of media is shifting to digital. I expect that digital advertising, in general, will show something like between 25% and 30% growth for the next three or four years. There are several macro factors -- one is the falling of the data prices because of the launch of Jio and all the competitors having to bring it down. Now for less than Rs 2000, you can get good smartphones and so I expect at least for the next five years there is going to be very good growth on digital. We have roughly 350 million internet users in India and that means that more than 900 million people or almost a billion people are not on the internet. The scope of growth is very high in that area.

As far as rest of the advertising is concerned, this year it has been a bit of a mixed bag. We started at the end of last year calendar year very badly with demonetisation impacting the business I think by about April the effect of demonetisation was over but in June and July the GST impact came in. I expect that this festive season should show a good uplift may be 15% to 20% but the real test will be what happens after the festive season is over because if it sustains at that level then I think we are over the problems on that, if it does not then I think there will be a long wait.

With falling data prices, digital and over the top services continue to rise in popularity. This will offer additional opportunities to broadcasters. Do you see broadcasters pursuing this opportunity and there being a revival of advertising revenues as well?

There will be a revival on the television revenues also because if the business grows, everything grows with it. It is like when the tide rises, all boats rise. The digital is a fundamental change and it is a consumer shift. All broadcasters who are invested in OTT and whose OTT platforms are doing well, are likely to grow much faster than the others who have not.

Even content is starting to be created with digital in mind. For example, the penetration levels of Facebook or Google in India, the way things are increasing all shows that digital advertising will completely outstrip all other advertising by a factor of maybe 200% or 250%. At the moment, digital is growing at about 30% while the ad market is growing between 10% and 12%, almost three times faster. The broadcasters who have invested in good OTT platforms, good content over there and have reached that out to the customers stand to gain much more I feel.

On digital and I am pressing more on this particular segment because that is where the explosion is likely to happen or most estimates work with the assumption that digital is the future. How do you see the digital advertising segment growth currently and what do you expect from it in the future?

You do not have to go very far. You just look at the consumer behaviour. If you look at the youngsters, they are not consuming media anywhere except on digital. You do not really need research to tell you. Just look at your children and you will have the answer over there. Whether they have got a book cinema tickets, whether they have got to choose a restaurant, they are completely on digital. You look at the search data, search and performance data, you can see an explosion happening over there because everybody is searching for things on mobile.

The other difference that has happened in India is that we became a mobile first market because mobile started becoming important, now we are becoming a mobile-only market. For every hundred new internet users that are coming in, 95 are coming in from mobile.

We are virtually getting to a stage where almost all new users are being added only through mobile. We are in the midst of this revolution. Currently, the digital advertising industry is growing at about 30% or so and I think on a long-term basis it will sustain at least for the next three to five years.

If something is growing at a compounded rate of 30%, you can imagine what sort of revolution we are in. Just a few years ago, digital used to account for 4% or 5% of the entire advertising industry. Today as we speak, it already accounts for 16% and Dentsu’s network research has shown that by 2020 which is just two-and-a-half years ago, it will be more than one-fourth of the market.

This is also a landmark year if you look at it globally because, in many of the top 10 or top 20 markets in the world, digital this year in 2017 or in 2018 is going to become the single largest medium. India is also definitely heading in that way though we are about four or five years behind in that cycle.

Where do Indian players like Hotstar, Amazon India stand as opposed to global peers?

They have done very well in the relatively short period that they have been here but so far that market has been less competitive because the number of players are small. The real test will be three years from now when almost every channel will have an OTT platform when there will be new players. For example, Netflix is now establishing itself bigger and bigger. So once this competition heats up, at the moment as far a digital advertising is concerned the big chunk is going to the duopoly of Facebook and Google. Soon Amazon will come into it because it has e-commerce fulfilment as well as a part of it.

A lot of these platforms like Hotstar is a good example. A few years ago there was hardly any advertising. This year if you looked at IPL, huge amounts of money were put in around that. Now with cricket coming in, more and more advertisers are likely to come onto that. So we are going to see a very good growth almost for all players but the key is content because just repurposing non-digital content for digital may not be the answer, the players who get the content right on digital, in the long run, they will be the survivors after this initial euphoria is over.